Summary: A definition of e-commerce and an overview of its impact on business.

Electronic commerce, or e-commerce, refers to the use of the Internet at any point during the buying and selling of goods. The term is commonly used to refer to transactions where an actual payment has been made online via a credit card. But e-commerce also involves other online activities such as marketing, distribution and servicing of products over the Internet. E-commerce often relies on technologies such as e-mail and enterprise resource planning applications for transaction completion and order fulfilment.

The term e-business is usually interchangeable with e-commerce. However, some definitions treat e-commerce as a subset of e-business. In these cases, a clear distinction is made between transactions that involve the exchange of money online and those that don’t. A transaction where a payment is made online is defined as e-commerce. And e-business is used to refer to all non-fiscal online transactions that facilitate and support the actual sale.

E-commerce can involve commercial activity between different interest groups. These could be business to business (B2B), business to consumer (B2C), business to administration (B2A), business to employee (B2E) or customer to customer (C2C). These classifications can be broken down into further sub-groups. For example, a B2B activity could be a vertical e-marketplace that offers goods or services to businesses within a specific industry segment. Alternatively, it could be a horizontal e-marketplace that offers services to businesses irrespective of industry segment.

E-commerce continues to grow in popularity and a large amount of business is transacted online every year. But it’s worth noting that it also presents many challenges for governments and regulatory bodies, which can also affect your business. The United Kingdom has relatively clear e-commerce definitions and laws. But with its decentralised and complicated tax structure, the United States still has a moratorium on new, multiple or discriminatory Internet taxes. In 2000, an advisory commission on e-commerce in the United States failed to reach a conclusive agreement on e-commerce taxation.

Summary: Factors to consider when selecting an e-commerce supplier and technology to suit your needs.

The right blend of services, individuals and approach is what makes an e-commerce project successful. Selecting the right supplier to build an online store is a vital part of this process. We point out some important issues you need to consider during this process.

Use a consultant: Strategic thinking is the base on which successful e-commerce sites are founded. It is a good idea to partner with an experienced consultant before selecting a particular supplier. An experienced consultant can set the project criteria on which the supplier’s deliverable and the Web site can be measured. A consultant’s input adds value to the proposed solution. 

Specification documents: All e-commerce projects require technical and functional specification documents. These have to be created and agreed upon before any development or designing efforts. The features and functionalities to be implemented within the site are provided in detail in these documents. They act as a blueprint for the whole project. With this type of documentation in place, it is easier to resolve any queries that may arise during the course of the project.

E-marketing: Check whether the e-commerce supplier provides e-marketing as a core service. A large portion of the budget is going to be used for marketing your e-commerce site, and it is essential for you to ensure that the supplier understands this. The marketing and search-engine optimisation aspect has to be built right into the structure of the site.

Supplier appraisal: The efficiency of a supplier can be measured based on the success of past clients and the quality of its portfolio. The factors that are clear indicators of the vendor’s capabilities are overall appeal and clarity of the Web site, inline delivery of the project, diverse market sectors serviced and objectives achieved.

Underlying technology: Ensure that your e-commerce site is driven by a solid business model and not by limitations in technology that have been imposed by the supplier.

Support: Support options and costs should be taken into consideration before a project commences. Verify that the e-commerce supplier is able to handle technical issues and provide the correct application and hosting service level.

Summary: Best practices you should adopt for successful online commerce.

E-commerce can involve selling products or making purchases through Web pages, online banking, transferring funds or any other transactions of money conducted through the means of an electronic data exchange. You need to implement best practices like the ones outlined below to ensure successful operation of your e-business.

Use the personal touch: Remember that your customers should never feel like they are dealing with a huge or impersonal space. Use tools such as member profiles, wish lists and cookies to identify individuals and their preferences. Personalization of a site is a very important aspect of e-commerce and those who ignore this are missing out on tremendous opportunities to understand and serve their customers.

Invest in marketing: The right kind of marketing contributes immensely to the success of the site. Your online business site should be found easily when people are looking for you or something similar. Take advantage of search-engine optimisation, but focus on organic search practices such as solid, informative content rather than keyword spamming.

Ensure customer loyalty: Loyalty programs are an extremely important and successful way to hang on to your best customers. The ability to keep track of customer activities and preferences is essential for online business. Proactively plan your strategies for this and offer programs such as rewards. Reach out to your customers through e-newsletters using your ready-made customer database.

Offer different payment options: Ensure that your Web site provides customers with adequate payment options. This is essential for good customer service and ensuring that you make the sale. Statistics suggest that online customers feel more comfortable paying through online bank accounts, PayPal accounts and debit cards.

Use good business sense: The same business logic that applies to your offline business should apply to your e-commerce site. Changing technological trends means that your e-business has to move with the times, so be prepared to change your business processes and rules. Try to integrate offline and online channels to take advantage of the best aspects of each. Your e-business should not rely on self-service and automation exclusively; customers may need personal assistance. Selection and convenience often have a greater value than coupons, so don’t compete on price alone.

Summary: A look at how e-commerce packages can benefit businesses.

By 2011 shoppers in the United Kingdom will be spending approximately €263 billion online. Figures like this should convince you that you need an online presence for your business. But if that doesn’t convince you, these benefits might.

Better customer relationship management. New e-commerce tools allow you to interact with customers in real time just as you would in a shop. A well-designed online store can enhance the customer experience. You can also monitor customer purchase histories and preferences to plan more effective sales strategies for the future.

Security of payments. Ignore the hype about online fraud. Traditional forms of receiving payments via credit card are sometimes more insecure than the encrypted, secure and efficiently managed payment methodologies adopted for online transactions.

Reduced marketing and customer acquisition costs. You can easily drive significant traffic to your Web store with simple search-engine optimisation techniques. A good online marketing strategy can lead to new customer acquisition at a much lower cost than with marketing an offline business. By offering several language choices, you can expand your market reach at no extra cost. And because your online store remains open all day, you can reach a much wider market with minimal outlay.

Lower business costs. Manpower, rental, administration and other costs for online stores are much lower than for traditional “bricks and mortar” businesses.

Efficient and simple business management. Your Web store can be integrated with back-office management such as accounting, CRM, logistics and supply chain packages. This leads to better management and administration reports. This in turn makes it easier to identify factors that lead to increased sales and reduced costs.

Supplier and dealer integration. An online presence can avoid unnecessary middlemen in the sales chain. But online information can also aid better communication with suppliers and dealers. Special tools allow you to manage your sourcing and supply strategies in real time based on instant and easily accessible sales information.